Author: Kaya Stanley, CEO of California Restaurant Mutual Benefit Corporation
The Department of Industrial Relations’ recent announcement of an increase in total assessments for 2024 presents a significant turning point for the insurance landscape in California, particularly impacting brokers and restaurant owners. Such changes necessitate a strategic and well-informed response, especially in the evolving insurance market.
The DIR’s decision to raise assessments to $1.7 billion – an 8.5% increase from the previous year – marks a notable shift, especially considering the broader movement from a soft to a hard insurance market.
For Brokers: Adapting Strategies
Guiding Through Self-Insurance: In light of these changes, brokers must adeptly guide their clients, including restaurant owners, in assessing the feasibility of self-insurance. This entails deep diving into each business’s financial stability and risk tolerance.
Communicating Rate Changes: Brokers need to inform clients about the assessment rates – the decrease for self-insured employers to 11.1% from 11.8% (representing a .7% decrease) and the over 6% premium increase for insured employers (representing a 3.3% increase over last year). The DIR’s decision means a 4% increase for insured employers versus the 4% savings self-insured employers will realize.
This crucial information is a deciding factor for businesses in evaluating self-insurance and a workers’ compensation buying decision.
Enhanced Risk Management Consultation: Given the market’s hardening, offering comprehensive consultations on risk management strategies becomes imperative.
Joining a self-insured group such as CRMBC comes with the benefit of safety and loss control services without additional work.
Insight into Market Trends: Brokers must stay updated with market trends, regulatory changes, and industry best practices to provide insightful and practical advice to their clients.
For Restaurant Owners:
Facing New Realities
Reassessing Insurance Options: With the premiums rising for insured employers, restaurant owners should consider self-insurance a more cost-effective alternative. However, this decision should be made with a clear understanding of the benefits and responsibilities of being self-insured.
Increased Focus on Safety and Training: The emphasis on risk management becomes more direct with self-insurance. Investing in safety training and workplace risk assessments is crucial for managing and mitigating claims effectively.
Exploring Potential Cost Savings: Self-insurance can lead to cost savings in the long run by reducing claim frequencies and enhancing claims management efficiency. Self-insurance has provided a safe harbor and rate stability across all financial markets for more than 105 years.
A Call to Strategic Action
The DIR’s 2024 assessment increase calls for a strategic reassessment of insurance strategies, balancing the potential benefits of self-insurance against the increased costs of traditional workers’ compensation insurance.
Each business must make a well-informed decision based on its unique financial stability, risk profile, and administrative capacity in this evolving insurance landscape. Brokers and restaurant owners must stay informed, proactive, and adaptable to navigate these changes successfully.
To discuss the benefits of joining a self-insurance group, please contact CRMBC at 559-558-4800 or email info@crmbc.com.
Kaya Stanley is an attorney, published author, business owner, and highly sought-after strategic turnaround expert. Ms. Stanley serves as CEO and Chairman of the Board for CRMBC, the largest restaurant workers’ compensation self-insured group in California, and she is the Licensee for TEDxReno, an independently organized TEDx Event.
Throughout her 22 years of practicing law, Ms. Stanley has served as outside counsel for Wal-Mart and Home Depot. She was voted one of the country’s “Top 25 OZ Attorneys” by Opportunity Zone Magazine and published a best-selling book called “The Employer’s Guide to Obamacare.” Before that, she earned her master’s degree in social work and public policy, after which she worked with at-risk girls in Detroit and lobbied for women and families.
